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Trading glossary

New to trading or need a refresher? Explore common trading terms you’ll encounter when using MetaMask’s trading features. This list will be updated as new features and terms are introduced.

Market basics

TermDefinition
Spot priceThe current market price of an asset for immediate execution
PnL (Profit & Loss)Shorthand for your profit or loss on a position
SpreadThe difference between the highest price someone is willing to buy (bid) and the lowest price someone is willing to sell (ask). Tighter spreads usually mean more liquid markets
SlippageThe difference between the expected price of a trade and the price it actually executes at. Slippage is common in fast or low-liquidity markets
LiquidityHow easily an asset can be bought or sold without moving its price too much. High liquidity = easier, smoother trades
VolatilityHow much and how quickly the price of an asset moves up or down. Crypto markets tend to be more volatile than, say, stock markets
Blue-chipWell-established assets with high liquidity and large market caps (e.g., ETH, BTC)
Long-tailSmaller, niche assets with low trading volume and liquidity. Riskier to trade due to higher slippage and volatility
BullishA sentiment expecting prices to rise
BearishA sentiment expecting prices to fall
HawkishA policy stance that favors tighter monetary conditions (e.g., higher interest rates), usually seen as negative for assets like crypto
DovishA policy stance that favors looser monetary conditions (e.g., lower interest rates), usually seen as positive for assets like crypto

Trading positions

TermDefinition
LongDirection you take if you're betting on the price going up
ShortDirection you take if you're betting on the price going down
LeverageA multiplier on your capital, amplifying gains and losses. Leverage is a key feature of perp trading that allows you to control larger positions. Learn more here
MarginThe amount of collateral you put up to open a trade
Order sizeYour total position size on a trade calculated as (margin × leverage)
Notional valueThe total value of your position. It represents the full trade size you're controlling, not just the margin you put up. Example: $1,000 margin at 10× leverage = $10,000 notional value
Maintenance marginThe minimum amount of margin you must keep to hold a position open. If your balance falls below this, your position will be liquidated
LiquidationThe point at which your equity falls below requirements and your position is closed automatically to prevent further losses
HedgingOpening a position designed to offset potential losses in another position. Also known as risk management with assets

Orders and Execution

TermDefinition
Market orderAn order to buy or sell immediately at the current market price. Fast, but may result in slippage
Limit orderAn order to buy or sell at a specific price or better. Offers more control, but may not fill if the market never reaches that price
Stop lossA price parameter where the position auto-closes to limit losses. Note: may not execute at the exact price in fast or illiquid markets
Take profitA price parameter where the position auto-closes in profit. Note: may not execute at the exact price in fast or illiquid markets
Entry PriceThe average price at which your position was opened
Position SizeIn tokens: the quantity of tokens you're long or short; In currency: the total notional value of your position

Derivatives & Metrics

TermDefinition
PerpsShort for perpetual futures. A type of derivative trading with no expiration date, letting you speculate on price movements indefinitely
DerivativesFinancial contracts whose value comes from an underlying asset (e.g., tokens, commodities, indexes). Perps and futures are common types
Funding rateA periodic payment between long and short traders to keep perp prices aligned with spot prices. Funding can be positive (longs pay shorts) or negative (shorts pay longs)
ROIReturn on investment. How much you made or lost on a trade relative to the amount you put in
Unrealized PnLProfit or loss on an open position that fluctuates with the market
Realized PnLProfit or loss locked in after closing a position
Open InterestThe total number of outstanding contracts (longs + shorts) in a market. High open interest often means high activity and liquidity
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